Brazil Electricity-Distribution Contracts to Be Based on Service

By Mario Sergio Lima -
Nov 1, 2013

President Dilma Rousseff’s
administration will try to steer electricity-distribution
contracts to companies with good customer-service records, a
government official involved discussions about the contracts
said.

A review of the contracts is not intended to cut rates, the
official said. Companies with poor service records or too much
debt may not have their contracts renewed, said the official,
who cannot be named because the discussions are not public.

Eletrobras, as the state-controlled energy company is
known, has a 15.27 debt to Ebidta ratio, the highest among the
publicly traded utilities that have contracts expiring,
according to data compiled by Bloomberg.

Eletrobras distribution units are not among the top
companies in terms of service, according to the website of the
country’s electricity regulator.

The company said on Oct. 28 that the restructuring plan for
its distribution units is already under evaluation from the
country’s development bank.